Which is Better for My Situation? Loan Modification or Refinance?

Which is Better? Loan Modification or Refinance?If you’re currently facing a situation where you are not sure if you’re going to lose your home you probably want to know your options before defaulting on the mortgage. You may have heard of the terms refinance and loan modification but really not understand the differences and which would work best in your situation. There is a difference between these two routes; one is more permanent and one is a temporary fix. One of the first things you need to do is contact your lender and let them know that you are having a hardship. If you want to keep your home there are two routes to go, loan modification or a refinance.


eplaces the existing mortgage with a completely new loan. You’ll have new loan terms and new loan rates. This is probably a better option if you’re considering going with a more permanent decision. This also works well if you had an adjustable rate mortgage and your now converting to a fixed rate loan. It may offer better advantages overall and for the long run.


A loan modification is an adjustment to the existing terms and rates on your loan. This may be a temporary fix and may only be for a short time until you can get back on your feet and get things back financially where they need to be. This would be the option to go with if you cannot refinance your existing well.

The difference is in the fees; there are extra fees to refinancing versus a loan modification. A loan modification is a temporary fix so closing costs and courier fees as well as points and other fees to creating a whole new loan do not apply. This is as if you had bought a completely new home with a new mortgage loan.

It’s always best to speak to a mortgage representative in order to find the best option for you. Give me a call and let’s find out what might be the best option for you. You might be surprised at how affordable a refinance can be! It may be the best option AND save you a boatload of money each month.